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Fractal trading????
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Fractal trading????

  #1 (permalink)
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Fractal trading????

Been reading some threads here mentioning fractal this, fractal that....but what exactly is fractal trading? How is it applied to trading? The word itself is above my head, can somebody explain what this is with trading example....please

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  #3 (permalink)
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The examples of fractal trading I seen referenced here earlier were super ridiculous. It was basically just a serial correlation method. I did not see much value. A fractal is a type of pattern that repeats at different scales. So, the example I seen is they claimed to have measured/found the fractal ratio-- in order to make that ratio work out they look for basically a type of pattern. This sort of analysis is going to be very subject to serial correlations, i.e. probably not going to add value beyond that.

Fractals are interesting but I'm not sure this method is as interesting. You can look up Bill William's fractals for more information. Below is a link to an explanation:

https://admiralmarkets.com/education/articles/forex-indicators/fractals-indicator

Note he says this because he's looking for a certain type of ratio, similar to Fib.

Quoting 
Williams said that a fractal pattern on a bar chart was made up of a minimum of five consecutive bars. An initiating fractal must have a middle bar that has a higher high or lower low than the two preceding bars and the two following bars.

Here is the key, you only take the trade if it goes beyond the fractal signal. So, the profits/losses with this method will very similar to any breakout method and work in highly serially correlated markets but less likely to work in other types of markets. This is true of most chart pattern trading methods.


Last edited by tpredictor; April 21st, 2018 at 02:07 PM.
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  #4 (permalink)
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It sounds interesting as Iím not really sure what is it, i thought maybe has something to do with math or algo stuff, well hey thanks for the explanation @tpredictor

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https://futures.io/trading-journals/7984-trading-91.html#post676752

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Fractals are fascinating. Prepare to have your mind blown.
Price action is SIMPLY fractal recurrence, its an inescapable truth. To better understand this let’s take a step out of the trading world and into nature and mathematics. Here are three examples of fractals:

See this picture? Its called Romanesco broccoli.

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Bloody marvellous looking specimen isn't it? Doesn't look real does it? That entire head of broccoli is made up of smaller heads with exactly the same shape. No matter where you zoom in, that shape is repeated. Its a mathematical marvel piece which adheres to the rules od the Fibonacci spiral. Check out this website to see the Fibonacci sequence revealed: The Fibonacci Numbers and Golden section in Nature - 1

Here is another example. You see this picture of a fern?

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Its not actually a real fern leaf. Its an image that is created by simply following a mathematical formula. All of its information is stored in a few lines of probability.
https://www.geogebra.org/m/bQ8ppzRj
https://en.wikipedia.org/wiki/Barnsley_fern#Construction



Last example. Sierpinski triangle. Incredibly, this shape can be created by simply throwing dice and plotting the coordinates on paper.

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This guy demonstrates in a video: https://www.youtube.com/watch?v=kbKtFN71Lfs&app=desktop



If a fractal has awareness at some level then it is doomed to repeat its existence for eternity never able to escape beyond the laws of its universe. Kinda sounds like our experience as humans doesnt it? Music can never escape the strings of the Lyre (love that one )

Holy crapamoly isn’t this a most mind boggling concept to ponder? Everything is a fractal recurrence, a larger version of something smaller and simply the middle of something much larger.....think about the trillions of planets that make up all those galaxies in the observable universe and then marvel at the similarity to all those little atoms that you are composed of.

(wiping tears from my face)

So yeah. Fractals are forms that can be replicated using the appropriate mathematical formula. When you look at a price action chart without knowing the time period, it is almost impossible to tell at which point in the fractal you are observing. Could be a 1 second, 1 minute, 1 hour, 1 day chart. The only difference being the speed at which the fractal is created.

Enjoy what remains of your weekend!

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  #7 (permalink)
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@tpredictor ok, i think i have to agree with you there trading wise, not going to comment on it since the chart on the link is a mess.

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@rintin2x

You asked about how to apply fractals in trading. (I'm really not clear how to do it), but if I think of fractals as repetitive patterns, well I know for sure those exist. One interesting thing is that when you see an image done with an equation which creates a fractal pattern, it is free to move in all directions left, right, up, down (and combinations thereof).

Price charts are constrained without any left motion. That is they can't move back in time (to the left), One could of course do it - it you had the programming skills (- that I don't have). It's only when the pattern overlays on itself that easily spotting the fractals (should they be there) could be done.

But there may be easier ways to find patterns to trade.

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  #9 (permalink)
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@aquarian1 and others, I personally not quite get what the meaning of fractal is. Now I understand and thanks for that. It just get me interesting when people talking about it on the threads because sounds cool hahaha. Now if I understand correctly, I think believe it or not every trader trading with fractal in mind because they see that repetitive pattern that they experience in their trading career either from chart or indicator (dang...why sounds similar to what I read ). Anyhow, thank you for the time and patience explaining those, feel a bit better now .

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  #10 (permalink)
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Though I may not be correct, I believe fractals are are fragments that make up the whole where the whole is similar in shape to the fragment (fractal).

"In mathematics, a fractal is an abstract object used to describe and simulate naturally occurring objects. Artificially created fractals commonly exhibit similar patterns at increasingly small scales.[1] It is also known as expanding symmetry or evolving symmetry. If the replication is exactly the same at every scale, it is called a self-similar pattern"
https://en.wikipedia.org/wiki/Fractal

One of the classics in trading would be the 3 waves. Highlighted by WD Gann and then later taken up in Elliot waves, a market move consists of the the first leg up, a retracement, the second leg up, a retracement, and the third leg up (which reaches the peak of the move). In Elliot wave speak this is 5 waves.

By having a typical count, eg 3 waves, one has an idea when the move is completed. So it can well be that the first leg itself is composed of 3 waves (a fractal), and the first leg of the fist leg is 3 waves (a fractal of a fractal) etc., etc,

This is referred to as "wheels within wheels" in older writings.

As an archetype of a typical movement it can be useful. Naturally, in trading each individual occurrence may not conform to the archetype. (For example, one time it may take 4 waves to complete a move, another two waves.)
Also of course, the waves can vary in length and height and ratios (both retracement, and upleg1 to upleg2).

So though each individual occurrence may not match the archetype, this is how it must be.

They cannot match every time or all traders will see them, exploit them and then in the process of exploiting
them destroy them.

Keep your mind in the future, in the now.

Last edited by aquarian1; April 22nd, 2018 at 01:01 PM.
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